U.S. markets opened in positive territory Friday morning after taking a breather from their recent record-breaking rally. The S&P 500 fell 0.5% on Thursday -- its biggest one-day drop since May 1.
“Give the market the benefit of the doubt,” Ritholtz tells The Daily Ticker. “But don’t be surprised if we see a little seasonal weakness. You can’t go up 20% every four months.”
Ritholtz says one major reason stocks will continue to advance is the fact that there is an “enormous amount of professionals who are underinvested.” They will be “forced into the market” if they want to keep their jobs, says Ritholtz.
Ritholtz advises individual investors to have their own investment plan in order to avoid the pitfalls of an emotional response to market gyrations. Don’t “let your own emotions be your worst enemy,” Ritholtz warns.
He also recommends a diversification strategy that includes “non-correlated” assets so investors can limit their loses and not become a slave to what the market does "tick by tick."
Ritholtz himself is overweight health care and dividend-paying stocks. He discounts concerns about a bubble forming in defensive dividend-payers.
“I’ve been hearing that for two years…the problem is your alternative is 1.8% in the 10-year Treasury," he notes.
Ritholtz’s top picks include Berkshire Hathaway (BRK-B), Pfizer (PFE), DuPont (DD) and Visa (V), which has been a “runaway house.” He bought Visa between $85 and $120 a share and it’s now trading at just under $180.
“I wouldn’t tell you to jump in now,” says Ritholtz.
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